Exhibit 10.26
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT, dated as of May 1, 1997 amends and
restates in its entirety that certain Amended and Restated Agreement made and
entered into as of the 1st day of September, 1994 by and between Concord Camera
Corp., a New Jersey corporation (together with its successors and assigns
permitted under this Agreement, the "Company"), and Xxx X. Xxxxxxx (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to continue the employ of the Executive
pursuant to the terms of this Amended and Restated Agreement (this "Agreement")
and the Executive has agreed to such continuation, subject to the terms and
provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a
person or other entity that directly or indirectly controls, is controlled by,
or is under common control with the person or other entity specified.
(b) "Base Salary" shall mean the salary provided for in
Section 4 below.
(c) "Board" shall mean the Board of Directors of the
Company.
(d) "Cause" shall mean:
(i) the Executive is convicted of a crime involving
moral turpitude (excluding offenses such as driving while intoxicated); or
(ii) the Executive (A) perpetrates a fraud upon the
Company or (B) materially breaches this Agreement which causes, in the case of
clause (B), material economic harm to the Company.
(e) A "Change in Control" shall mean the occurrence of any
one of the following events:
(i) any "person," as such term is used in Sections
3(a)(9) and 13(d) of the Securities Exchange Act of 1934 (other than Executive),
becomes a "beneficial
owner," as such term is used in Rule 13d-3 promulgated under that act, of 25% or
more of the Voting Stock of the Company;
(ii) the majority of the Board consists of
individuals other than Incumbent Directors, which term means the members of the
Board on the date of this Agreement; provided that any person becoming a
director subsequent to such date whose election or nomination for election was
supported by two-thirds of the directors who then comprised the Incumbent
Directors shall be considered to be an Incumbent Director;
(iii) the Company adopts any plan of liquidation
providing for the distribution of all or substantially all of its assets;
(iv) all or substantially all of the assets or
business of the Company is disposed of pursuant to a merger, consolidation or
other transaction (unless the shareholders of the Company immediately prior to
such merger, consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned the Voting Stock
of the Company, the Voting Stock or other ownership interests of the entity or
entities, if any, that succeed to the business of the Company); or
(v) the Company combines with another company and is
the surviving corporation but, immediately after the combination, the
shareholders of the Company immediately prior to the combination hold, directly
or indirectly, 50% or less of the Voting Stock of the combined company (there
being excluded from the number of shares held by such shareholders, but not from
the Voting Stock of the combined company, any shares received by Affiliates of
such other company in exchange for stock of such other company).
(f) "Compensation Committee" shall mean the Compensation
Committee of the Board.
(g) "Confidential Information" shall mean all information
that is not known or available to the public concerning the business of the
Company or any Subsidiary of the Company relating to its products, product
development, trade secrets, customers, suppliers, finances, and business plans
and strategies. For this purpose, information known or available generally
within the trade or industry of the Company or any Subsidiary of the Company
shall be deemed to be known or available to the public. Confidential Information
shall include information that is, or becomes, known to the public as a result
of a breach by the Executive of the provisions of Section 13 below.
(h) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his initiative as provided in
Section 10(d) below following the occurrence, without the Executive's prior
written consent, of one or more of the following events (except in consequence
of a prior termination):
(i) a reduction in or elimination of (A) the
Executive's then current Base Salary, (B) his bonus opportunity for which he is
eligible under Section 5 below, or (C) his opportunity for any long-term
incentive award for which he is eligible under Section 6(A) below or the
termination or material reduction of any employee benefit or perquisite enjoyed
by him;
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(ii) the failure to elect or reelect the Executive to
any of the positions described in Section 3 below or his removal, without Cause,
from any such position;
(iii) a material diminution in the Executive's duties
as Chairman and Chief Executive Officer of the Company, as provided in Section
3(a) below, or the assignment to the Executive of duties which are materially
inconsistent with such duties or which materially impair the Executive's ability
to function as Chairman and Chief Executive Officer of the Company;
(iv) the failure to continue the Executive's
participation in any incentive compensation plan for which he is eligible unless
a plan providing a substantially similar opportunity is substituted;
(v) the relocation of the Company's principal
office, or the Executive's own office location as assigned to him by the
Company, to a location more than 50 miles from Avenel, New Jersey, provided that
such a relocation to a location within 50 miles from Avenel, New Jersey, shall
constitute grounds for a Constructive Termination Without Cause if such location
is more than 100 miles from the Executive's residence on the date of this
Agreement; or
(vi) the failure of the Company to obtain the
assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets of the Company within 45
days after the merger, consolidation, sale or similar transaction resulting in
such succession provided that Executive may not treat such failure as a
Constructive Termination Without Cause unless such failure is not cured within
10 days of receipt of notice thereof by such successor from Executive.
(i) "Disability shall mean the Executive's inability, due to
physical or mental incapacity, to substantially perform his duties and
responsibilities under this Agreement for a period of 180 consecutive days or
for 180 days in a 365-day period.
(j) "Non-Extension Event" shall mean any termination of the
Term of Employment resulting from an election by the Company not to extend the
Term of Employment, provided that Executive has delivered to the Company, within
30 days of receipt by Executive of written notice from the Company to the effect
that the Company intends to allow the Term of Employment to expire, a notice to
the effect that Executive is willing to have the Term of Employment extended on
the terms set forth in this Agreement as then in effect.
(k) "Stock shall mean the Common Stock of the Company.
(l) "Subsidiary" shall mean any corporation or other entity
of which the Company owns, directly or indirectly, more than 50% of the Voting
Stock or, in the case of an entity other than a corporation, more than 50% of
the equity interest.
(m) "Term of Employment" shall mean the period or periods
specified in Section 2 below.
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(n) "Voting Stock" shall mean capital stock of any class or
classes having general voting power under ordinary circumstances, in the absence
of contingencies, to elect the directors of a corporation.
2. Term of Employment.
(a) The Company hereby employs the Executive, and the
Executive hereby accepts such employment, for the Term of Employment commencing
May 1, 1997 and ending at the close of business on April 30, 2001, subject to
earlier termination of the Term of Employment in accordance with the terms of
this Agreement and subject to extension of the Term of Employment in accordance
with the terms of Section 2(b) below.
(b) The Term of Employment shall automatically be extended
for one additional day (subject to earlier termination in accordance with the
terms of this Agreement) for each day of the Term of Employment that elapses in
the event that neither Party notifies the other Party in writing in accordance
with Section 27 below at any time during the Term of Employment that either the
Company or the Executive does not want the Term of Employment extended
thereafter.
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3. Position, Duties and Responsibilities.
(a) During the Term of Employment, the Executive shall be
employed as Chairman and Chief Executive Officer of the Company and be
responsible, subject to the control of the Board, for the establishment and
implementation of corporate policy and general management of the Company. In
that capacity the Executive shall have the duties and responsibilities normally
associated with the positions of Chairman and Chief Executive Officer. It is the
intention of the Parties that the Executive serve as a member of the Board and
as a member of the Executive Committee during the Term of Employment. The
Executive, in carrying out his duties under this Agreement, shall report to, and
be subject to the supervision of, the Board. At any time that the Company does
not have another person acting as the President and Chief Operating Officer of
the Company, Executive shall also have such titles and serve in such capacities,
it being understood that the relinquishment of such titles by Executive upon
employment of a President and Chief Operating Officer by the Company shall not
constitute a breach by the Company of its obligations under this Agreement.
(b) Anything herein to the contrary notwithstanding, nothing
shall preclude the Executive from (i) serving on the boards of directors of a
reasonable number of other corporations not engaged in competition with the
Company or the boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable activities and community
affairs, (iii) managing his personal investments and affairs and (iv) being
involved in other business transactions, provided that such activities do not
materially interfere with the proper performance of his duties and
responsibilities as the Company's Chairman and Chief Executive Officer.
4. Base Salary.
The Executive shall be paid a Base Salary at the annualized rate
of $500,000, payable in accordance with the regular payroll practices of the
Company, but in no event shall he be paid less frequently than monthly.
Executive's Base Salary shall be subject to review by the Board of Directors on
an annual basis, and may be adjusted from time to time only upward by the Board
of Directors acting in its discretion.
5. Annual Bonus.
The Executive shall be entitled to be considered for receipt of
an annual bonus, the calculation of which is to be determined in accordance with
an incentive plan established from time to time by the Board of the Company. In
the event that the Company does not have an established incentive plan for any
fiscal year, the Executive shall be entitled to be considered for receipt of an
annual bonus, based upon pre-tax income of the Company, payable promptly after
the close of such fiscal year, the amount, if any, of which shall be determined
by the Board in its sole discretion.
6. Long-Term Incentive Programs.
General. The Executive shall be eligible to participate in the
long-term incentive programs of the Company on the same basis as other senior
level executives of the Company.
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7. Employee Benefit Programs and Vacation.
(a) During the Term of Employment, except to the extent
greater benefits are provided pursuant to Section 8 hereof, the Executive shall
be entitled to participate in all employee pension and welfare benefit plans and
programs made available to the Company's senior level executives or to its
employees generally, as such plans or programs may be in effect from time to
time, including, without limitation, pension, profit sharing, savings and other
retirement plans or programs, medical, dental, hospitalization, short-term and
long-term disability and life insurance plans, accidental death and
dismemberment protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee welfare benefit plans or
programs that may be sponsored by the Company from time to time, including any
plans that supplement the above-listed types of plans or programs, whether
funded or unfunded.
(b) In addition to the Base Salary, annual bonus, long-term
incentive programs as set forth in Sections 4, 5 and 6, the Company agrees to
adopt a supplemental executive retirement plan (the "SERP") for the benefit of
the Executive. Under the SERP, the Company shall caused $14,167 to be credit
each month (a "Monthly Credit") to a special account maintained for this purpose
for the benefit of the Executive (the "SERP Account"). During any calendar year
of the Term, the Company, in its sole discretion, may accelerate the crediting
of the Monthly Credits with respect to such year to the SERP Account. The
amounts credited to the SERP Account shall be deemed invested or reinvested in
such investments as determined by the Executive. The SERP Account shall be
credited and debited to reflect the deemed investment returns, losses and
expenses atributed to such deemed investments and reinvestments. The Executive's
benefit under the SERP shall equal the balance in the SERP Account and such
benefit shall always be 100% vested (i.e., not forfeitable). The Company shall
establish a rabbi trust for the purpose of accumulating funds to satisfy the
obligations incurred by the Company pursuant to this Section 7(b). Each time the
Company credits a Monthly Credit to the SERP Account, the Company shall
simultaneously contribute an amount equal to such credit to the trust.
(c) The Executive may elect by prior written notice
delivered to the Company at least 15 days prior to the commencement of any
calendar year during the Term to defer payment of, and have the Company credit
to a special account or accounts maintained for this purpose (each such account,
a "Deferral Account") all or any portion of the payments due to the Executive
under the Agreement for such year. The written notice shall also provide the
Executive's election as to the form and timing of the distribution of the
balance in the Deferral Account(s). The amounts credited to a Deferral Account
shall be deemed invested or reinvested in such investments as determined by the
Executive. The Deferral Account shall be credited and debited to reflect the
deemed investment returns, losses and expenses attributed to such deemed
investments and reinvestments. The Executive's benefit under this Section 7(c)
shall equal the balance in the Deferral Account(s) and such benefit shall always
be 100% vested (i.e., not forfeitable). The Company shall establish a rabbi
trust (which may or may not be same rabbi trust established pursuant to Section
7(b)) for the purpose of accumulating funds to satisfy the obligations incurred
by the Company pursuant to this Section 7(c) and shall contribute to the trust
amounts equal to the payments deferred under this Section 7(c) at the times such
payments would have been paid to the Executive if such payment were not
deferred. The Executive's rights to benefits pursuant to this Section 7(c) or
Section 7(b) shall be no greater than those of a general creditor of the
Employer. The Executive's benefits pursuant to this Section 7(c) or Section 7(b)
may not be anticipated, assigned, alienated, pledged, encumbered or subject to
attachment, garnishment, levy, execution, or other legal or equitable process.
(d) The Executive shall be entitled to one month vacation
per year. The Executive shall be paid, as additional compensation, for any
vacation not taken within one year of the end of the fiscal year of the Company
in which it accrued.
8. Additional Life Insurance and Disability Insurance.
(a) In addition to any life insurance provided pursuant to
Section 7(a) above, the Company shall provide the Executive with term life
insurance coverage the beneficiary of which shall be designated by the Executive
in the amount of $4.5 million face value. In addition, the Company shall provide
the Executive with long-term disability coverage with an annual benefit of
$232,500. Both life insurance and long-term disability coverages shall be
provided to the Executive at the Company's expense.
(b) In the event the Parties agree, the Company shall
satisfy its obligations under Section 8(a) above by (i) paying the premiums when
due on the Executive's existing life and disability insurance policies or (ii)
reimbursing the Executive for his payment of such premiums on his existing life
and disability insurance policies to the extent of the portion of such premiums
providing the insurance coverages stated in Section 8(a) above.
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(c) The Company may purchase, maintain and be the
beneficiary of a key-man life insurance policy on the Executive's life, the
purpose of which may be, among other things, to guarantee payment of the
Company's obligation under Section 10(a)(i) below. Executive agrees to submit to
such physical examinations as the Company shall reasonably request for the
purpose of obtaining the life insurance policies contemplated by this Section 8.
9. Reimbursement of Business and Other Expenses and Perquisites.
(a) The Executive is authorized to incur expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all such expenses subject to
documentation in accordance with the Company's policy.
(b) The Company shall promptly reimburse the Executive for
all reasonable expenses he incurs in moving his residence to a location closer
to the Company's principal office in Avenel, New Jersey, whenever such move
occurs during the Term of Employment, with such reimbursement estimated at
$10,000.
(c) The Company shall provide to Executive a car allowance
equal to $2,500 per month. The Company shall also promptly reimburse Executive
for all expenses, including, without limitation, parking and commutation
expenses, incurred in the Executive's use and operation of such automobile in
connection with the performance of his duties under this Agreement.
(d) The Company shall promptly reimburse the Executive for
the costs and expenses associated with acquiring and maintaining a telephone,
facsimile, duplicating and other office equipment and supplies at the home of
the Executive.
(e) The Company shall maintain at Company expense in New
York, New York a corporate apartment for Executive's use provided that Executive
shall bear the cost of one-third of the rental expense to provide for any
personal use of Executive (whether by reimbursement to the Company or direct
payment by Executive) and provided, further that the maximum net rental
obligation of the Company pursuant to the provisions of this Section 9(e) shall
not exceed $4,000 per month. Said apartment shall be reasonably satisfactory to
Executive.
(f) It is the intention of the Company that the Executive
shall, after taking into account any taxes on such reimbursements, expenses and
perquisites be kept whole in respect of the reimbursements, expenses and
perquisites referred to in Section 8 and Sections 9(a) through 9(e) above.
Accordingly, to the extent the Executive is taxable on any such reimbursements,
expenses and perquisites the Company shall pay the Executive in connection
therewith an amount which after all taxes incurred by the Executive on such
amount shall equal the amount of the reimbursements, expenses and perquisites
being provided.
(g) In addition to the foregoing, the Executive shall be
eligible to participate in all perquisites made available by the Company to its
senior level executives.
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10. Termination of Employment.
(a) Termination Due to Death. In the event the Executive's
employment is terminated due to his death, his estate or his beneficiaries, as
the case may be, shall be entitled to:
(i) a lump sum payment of Base Salary for the period
of the Term of Employment remaining until its expiration as scheduled
immediately prior to his death;
(ii) a pro rata bonus for the year in which the
Executive's death occurs based on the target bonus opportunity for such
year, payable in a lump sum promptly after his death;
(iii) the balance of any bonus earned (but not yet
paid);
(iv) any amounts earned, accrued or owing but not yet
paid under Section 6, 7 or 9 above; and
(v) any other or additional benefits provided for in
accordance with applicable plans and programs of the Company.
(b) Termination Due to Disability. In the event the
Executive's employment is terminated due to his Disability, he shall be entitled
to:
(i) Base Salary for the period of the Term of
Employment remaining until its expiration as scheduled immediately prior
to termination due to Disability, less the amount of any disability
benefits provided to the Executive by the Company or under any
disability insurance paid for or for which premiums paid by the
Executive were reimbursed by the Company;
(ii) a pro rata bonus for the year in which
termination due to Disability occurs based on the target bonus
opportunity for such year, payable in a lump sum promptly following
termination due to Disability;
(iii) the balance of any bonus earned (but not yet
paid);
(iv) any amounts earned, accrued or owing but not yet
paid under Section 6, 7 or 9 above;
(v) any other or additional benefits provided for in
accordance with applicable plans and programs of the Company.
In no event shall a termination of the Executive's employment
for Disability occur unless the Party terminating his employment gives written
notice to the other Party in accordance with Section 27 below.
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(c) Termination by the Company for Cause.
(i) A termination for Cause shall not take effect
unless the provisions of this paragraph (i), to the extent applicable, are
complied with. The Executive shall be given written notice by the Board of the
intention to terminate him for Cause, such notice (A) to state in detail the
particular act or acts or failure or failures to act that constitute the grounds
on which the proposed termination for Cause is based and (B) to be given within
six months of the Board's learning of such act or acts or failure or failures to
act. If the ground stated for Cause is stated in Section 1(d)(i) or Section
1(d)(ii)(A), the Executive shall be terminated for Cause upon receipt of such
notice. If the ground stated for Cause is stated in Section 1(d)(ii)(B), the
Executive shall have 30 days after the date such written notice has been given
to the Executive in which to cure such conduct, to the extent such cure is
possible. If he fails to cure such conduct, the Executive shall then be entitled
to a hearing before the Board. Such hearing shall be held within 15 days of such
notice to the Executive, provided he requests such hearing within 10 days of the
written notice from the Board of the intention to terminate him for Cause. If,
within five days following such hearing, the Executive is furnished written
notice by the Board confirming that, in its judgment, grounds for Cause on the
basis of the original notice exist, he shall thereupon be terminated for Cause.
(ii) In the event the Company terminates the
Executive's employment for Cause, he shall be entitled to:
(A) Base Salary through the date of
the termination of his employment for Cause;
(B) any bonus earned (but not yet
paid);
(C) any amounts earned, accrued or
owing but not yet paid under Section 6, 7 or 9 above; and
(D) any other or additional benefits
provided for in accordance with applicable plans or programs of
the Company.
(iii) Anything herein to the contrary notwithstanding,
if following a termination of the Executive's employment by the Company for
Cause based upon the conviction of the Executive for a crime involving moral
turpitude related to the Company's business or performance of Executive's duties
for the Company, such conviction is overturned in a final determination on
appeal, the Executive shall be entitled to the payments and the economic
equivalent of the benefits the Executive would have received if his employment
had been terminated by the Company without Cause. Any amounts earned by
Executive during the period in respect of which payments are required to be made
to him by the Company pursuant to this subparagraph shall be offset against the
Company's payment obligation.
(d) Termination Without Cause or Constructive Termination
Without Cause. In the event the Executive's employment is terminated without
Cause, other than due to
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Disability or death, or in the event there is a Constructive Termination Without
Cause, the Executive shall be entitled to:
(i) Base Salary through the date of termination of
the Executive's employment;
(ii) Base Salary, at the annualized rate in effect on
the date of termination of the Executive's employment (or in the event a
reduction in Base Salary is the basis for a Constructive Termination
Without Cause, then the Base Salary in effect immediately prior to such
reduction), payable in installments as provided in Section 4 hereof plus
the amounts provided for in Sections 8(a) and (b) and Sections 9(c),
(d), (e), (f) and (g), for the period remaining until the expiration of
the Term of Employment as scheduled immediately prior to the termination
of the Executive's employment, plus 12 months;
(iii) a pro rata bonus for the year in which
termination occurs based on the target bonus opportunity for such year,
payable in a lump sum promptly following termination;
(iv) the balance of any bonus earned (but not yet
paid);
(v) any amounts earned, accrued or owing but not yet
paid under Section 6, 7 or 9 above;
(vi) continued participation in all medical, dental,
hospitalization and life insurance coverage and in other employee
benefit plans or programs in which he was participating on the date of
the termination of his employment until the earlier of:
(A) the end of the period during
which he is receiving salary continuation payments and
(B) the date, or dates he receives
coverage and benefits under employee benefit plans and programs
of a subsequent employer;
provided that (1) if the Executive is precluded from continuing his
participation in any employee benefit plan or program as provided in
this clause (vii) of this Section 10(d), he shall be provided with the
after-tax economic equivalent of the benefits provided under the plan or
program in which he is unable to participate for the period specified in
this clause (vii), (2) the economic equivalent of any benefit foregone
shall be deemed to be the lowest cost that would be incurred by the
Executive in obtaining such benefit himself on an individual basis and
(3) payment of such after-tax economic equivalent shall be made
quarterly in advance; and
(vii) any other or additional benefits provided for in
accordance with applicable plans and programs of the Company.
(e) Termination of Employment and Acceleration of
Entitlements Following a Change in Control. If, following a Change in Control,
the Executive's employment is terminated without Cause, other than due to
Disability or death, or there is a Constructive
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Termination Without Cause, the Executive shall be entitled to the payments and
benefits provided in Section 10(d) above, and the salary continuation payments
shall be paid in a lump sum without any discount. Also, immediately following a
Change in Control, all amounts, entitlements or benefits in which he is not yet
vested shall become fully vested except to the extent such vesting would be
inconsistent with the terms of the relevant plan and he shall become entitled to
exercise any stock option in full for the remainder of its term regardless of
whether he continues in employment or the circumstances of his termination of
employment. In connection with the occurrence of a Change in Control, Executive
and the Company agree to negotiate in good faith, payment arrangements and
covenant changes (without reducing the total amount payable pursuant to this
Section 10(e)) designed to preserve to the Company the deductibility for federal
income tax purposes of, and eliminate any Excise Tax (as defined in Section
10(h)) payable in respect of, amounts paid pursuant to this Section 10(e).
(f) Voluntary Termination. In the event of a termination of
employment by the Executive on his own initiative other than a termination due
to death or Disability or a Constructive Termination without Cause, the
Executive shall have the same entitlements as provided in Section 10(c)(ii)
above for a termination for Cause and such termination shall not be deemed a
breach of this Agreement.
(g) Termination Because of Non-Renewal Event. In the event
Executive's employment is terminated at the end of the then scheduled Term of
Employment by reason of the occurrence of a Non-Extension Event, the Executive
shall be entitled to
(i) Base Salary through the date of termination of
Executive's employment;
(ii) Base Salary, at the annualized rate in effect on
the date of termination of the Executive's employment, payable in
installments as provided in Section 4 hereof plus the amounts provided
for in Sections 8(a) and (b) and Sections 9(c), (d), (e), (f) and (g),
for a period of 12 months following such termination;
(iii) a pro rata bonus for the year in which
termination occurs based on the target bonus opportunity for such year,
payable in a lump sum promptly following termination;
(iv) the balance of any bonus earned (but not yet
paid);
(v) any amounts earned, accrued or owing but not yet
paid under Section 6, 7 or 9 above;
(vi) continued participation in all medical, dental,
hospitalization and life insurance coverage and in other employee
benefit plans or programs in which he was participating on the date of
the termination of his employment until the earlier of:
(A) the end of the period during
which he is receiving salary continuation payments and
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(B) the date, or dates he receives
coverage and benefits under employee benefit plans and programs
of a subsequent employer;
provided that (1) if the Executive is precluded from continuing his
participation in any employee benefit plan or program as provided in
this clause (vii) of this Section 10(g), he shall be provided with the
after-tax economic equivalent of the benefits provided under the plan or
program in which he is unable to participate for the period specified in
this clause (vii), (2) the economic equivalent of any benefit foregone
shall be deemed to be the lowest cost that would be incurred by the
Executive in obtaining such benefit himself on an individual basis and
(3) payment of such after-tax economic equivalent shall be made
quarterly in advance; and
(vii) any other or additional benefits provided for in
accordance with applicable plans and programs of the Company.
(h) Limitation Following a Change in Control. In the event
that the termination of the Executive's employment is for one of the reasons set
forth in Section 10(e) above and the aggregate of all payments or benefits made
or provided to the Executive under Section 10(e) above and under all other plans
and programs of the Company (the "Aggregate Payment") is determined to
constitute a Parachute Payment, as such term is defined in Section 280G(b)(2) of
the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall
pay to the Executive, prior to the time any excise tax imposed by Section 4999
of the Code ("Excise Tax") is payable with respect to such Aggregate Payment, an
additional amount which, after the imposition of all income and excise taxes
thereon, is equal to the Excise Tax on the Aggregate Payment. The determination
of whether the Aggregate Payment constitutes a Parachute Payment and, if so, the
amount to be paid to the Executive and the time of payment pursuant to this
Section 10(h) shall be made by an independent auditor (the "Auditor") jointly
selected by the Company and the Executive and paid by the Company. The Auditor
shall be a nationally recognized United States public accounting firm which has
not, during the two years preceding the date of its selection, acted in any way
on behalf of the Company or any Subsidiary or Affiliate thereof. If the
Executive and the Company cannot agree on the firm to serve as the Auditor, then
the Executive and the Company shall each select one accounting firm and those
two firms shall jointly select the accounting firm to serve as the Auditor.
(i) No Mitigation; No Offset. In the event of any
termination of employment under this Section 10, the Executive shall be under no
obligation to seek other employment and there shall be no offset against amounts
due the Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain except as
specifically provided in this Section 10.
(j) Nature of Payments. Any amounts due under this Section
10 are in the nature of severance payments considered to be reasonable by the
Company and are not in the nature of a penalty.
11. Indemnification.
(a) The Company agrees that if the Executive is made a
party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal,
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administrative or investigative (a "Proceeding"), by reason of the fact that he
is or was a director, officer or employee of the Company or is or was serving at
the request of the Company as a director, officer, member, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the
basis of such Proceeding is the Executive's alleged action in an official
capacity while serving as a director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the Company to the fullest
extent permitted or authorized by the Company's certificate of incorporation or
bylaws or, if greater, by the laws of the State of New Jersey, against all cost,
expense, liability and loss (including, without limitation, attorney's fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even if
he has ceased to be a director, member, employee or agent of the Company or
other entity and shall inure to the benefit of the Executive's heirs, executors
and administrators. The Company shall advance to the Executive to the extent
permitted by law all reasonable costs and expenses incurred by him in connection
with a Proceeding within 20 days after receipt by the Company of a written
request, with appropriate documentation, for such advance. Such request shall
include an undertaking by the Executive to repay the amount of such advance if
it shall ultimately be determined that he is not entitled to be indemnified
against such costs and expenses.
(b) Neither the failure of the Company (including its board
of directors, independent legal counsel or stockholders to have made a
determination prior to the commencement of any proceeding concerning payment of
amounts claimed by the Executive under Section 11(a) above that indemnification
of the Executive is proper because he has met the applicable standard of
conduct, nor a determination by the Company (including its board of directors,
independent legal counsel or stockholders) that the Executive has not met such
applicable standard of conduct, shall create a presumption that the Executive
has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors'
and officers' liability insurance policy covering the Executive to the extent
the Company provides such coverage for its other executive officers.
(d) Promptly after receipt by the Executive of notice of any
claim or the commencement of any action or proceeding with respect to which the
Executive is entitled to indemnity hereunder, the Executive shall notify the
Company in writing of such claim or the commencement of such action or
proceeding, and the Company shall (i) assume the defense of such action or
proceeding, (ii) employ counsel reasonably satisfactory to the Executive and
(iii) pay the reasonable fees and expenses of such counsel. Notwithstanding the
preceding sentence, the Executive shall be entitled to employ counsel separate
from counsel for the Company and from any other party in such action if the
Executive reasonably determines that a conflict of interest exists which makes
representation by counsel chosen by the Company not advisable. In such event,
the reasonable fees and disbursements of such separate counsel for the Executive
shall be paid by the Company to the extent permitted by law.
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(e) After the termination of this Agreement and upon the
request of the Executive, the Company agrees to reimburse the Executive for all
reasonable travel, legal and other out-of-pocket expenses related to assisting
the Company to prepare for or defend against any action, suit, proceeding or
claim brought or threatened to be brought against the Company or to prepare for
or institute any action, suit, proceeding or claim to be brought or threatened
to be brought against a third party arising out of or based upon the
transactions contemplated herein and in providing evidence, producing documents
or otherwise participating in any such action, suit, proceeding or claim. In the
event the Executive is required to appear after termination of this Agreement at
a judicial or regulatory hearing in connection with the Executive's employment
hereunder, or Executive's role in connection therewith, the Company agrees to
pay the Executive a sum, to be mutually agreed upon by the Executive and the
Company, per diem for each day of his appearance and each day of preparation
therefor.
12. Effect of Agreement on Other Benefits.
Except as specifically provided in this Agreement, the existence
of this Agreement shall not prohibit or restrict the Executive's entitlement to
full participation in the employee benefit and other plans or programs in which
senior executives of the Company are eligible to participate.
13. Confidentiality.
The Executive shall not, without the prior written consent of
the Company and without limitation as to time, divulge, disclose or make
accessible to any other person, firm, partnership, corporation or other entity
any Confidential Information except (a) in the course of carrying out his duties
under this Agreement or (b) when required to do so by a court of law, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order him to divulge, disclose or make
accessible such information.
14. Non-Compete.
(a) During the Term of Employment and for a period of
12 months thereafter, the Executive shall not, directly or indirectly, except
when acting on behalf of the Company, whether as an employee, consultant,
partner, principal, agent, distributor, representative, stockholder or otherwise
(except that he may be a stockholder of not more than a 1% equity interest in a
public company), engage in any activities in any country world-wide in which the
Company then conducts business or into which the Company then sells or otherwise
distributes any of its products that are in competition with the businesses of
the Company or any Subsidiary. For this purpose, a business shall be deemed to
be in competition with the Company or any Subsidiary if such business involves
the business then conducted by the Company or any Subsidiary and during the Term
of Employment was either being conducted by the Company or any Subsidiary or
actively being developed during the Term of Employment by the Company or any
Subsidiary.
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(b) During the Term of Employment and for a period of 12
months thereafter, the Executive shall not directly or indirectly (i) solicit
any customer of the Company or any Subsidiary to do business with any business
that is in competition with the Company or any Subsidiary within the meaning set
forth in Section 12(a) above or (ii) solicit any person, other than his
secretary/administrative assistant who is employed by the Company or any
Subsidiary or who was employed by the Company or any Subsidiary within 12 months
of such solicitation to (A) terminate his or her employment with the Company or
any Subsidiary, (B) accept employment with anyone other than the Company or any
Subsidiary or (C) in any manner interfere with the business of the Company or
any Subsidiary.
(c) The Executive acknowledges that the Company has no
adequate remedy at law and would be irreparably harmed if he breaches or
threatens to breach the provisions of Section 13 or Section 14(a) or 14(b)
above, and therefore agrees that the Company or any Subsidiary, as the case may
be, shall be entitled to injunctive relief, to prevent any breach or threatened
breach of any of those provisions and to specific performance of the terms of
each of such provisions in addition to any other legal or equitable remedy it
may have. The Executive further agrees that he shall not, in any equity
proceeding relating to the enforcement of Section 13 or Section 14(a) or 14(b)
above, raise the defense that the Company or any Subsidiary has an adequate
remedy at law. Nothing in this Agreement shall be construed as prohibiting the
Company or any Subsidiary from pursuing any other remedies at law or in equity
that it may have or any other rights that it may have under any other agreement.
(d) In the event of a termination of the Executive's
employment without Cause which entitles the Executive to the payments and
benefits set forth in Section 10(d) above, the provisions of Section 14(a) and
14(b) above shall be deemed applicable to the Executive for the period in which
his Base Salary and other benefits are continued if such continuation period
exceeds 12 months.
(e) If it is determined that any of the provisions of this
Section 14, or any part thereof, is unenforceable because of the duration or
geographical scope of such provision, it is the intention of the parties that
the duration or scope of such provision, as the case may be, shall be reduced so
that such provision becomes enforceable and, in its reduced form, such provision
shall then be enforceable and shall be enforced.
15. Adequacy of Disclosure.
The Company acknowledges that it has been provided with the
requested information concerning the background of the Executive. The Company
further acknowledges that it has been given the right to independently examine,
inspect and make inquiry with respect to the Executive.
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16. Acknowledgment of Representation of Counsel.
The Parties acknowledge that they have been represented by
counsel or knowingly waive their right to be represented by counsel with regard
to this Agreement and the subject matter hereof. Each party agrees and
acknowledges that he or it has not relied upon any tax advice, legal counsel or
business advice provided by the other Party.
17. Cooperation Between the Parties.
(a) The parties agree that each party will use its or his
best efforts in carrying out the terms of this Agreement, including, but not
limited to, the furnishing and supplying of all necessary information and
documents to the other Party.
(b) In the event that at any time after the date of this
Agreement the Internal Revenue Service or any state or local taxing authority
audits the tax returns of the Executive for any taxable year or years, the
Company shall use its best efforts to cooperate with the Executive in connection
with such audit and shall provide the Executive with access to the books and
records of the Company in connection with matters under audit.
(c) Except as specifically provided in Section 10(c)(iii),
amounts due to the Executive hereunder may not be offset by the Company against
amounts claimed to be due from the Executive to the Company, whether by
withholding by the Company of payment, or by assertion by the Company of
defenses, claims, counterclaims or setoffs in a litigation commenced either by
the Executive or by the Company with respect to this Agreement or any other
matters; provided, however, that the Company shall have the right to raise any
such defenses, claims, counterclaims or setoffs in a separate action.
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18. Assignability; Binding Nature.
This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, heirs (in the case of the
Executive) and assigns. No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company except that such rights
or obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of the Company, provided
that the assignee or transferee is the successor to all or substantially all of
the assets of the Company and such assignee or transferee assumes the
liabilities, obligations and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law. The Company further
agrees that, in the event of a sale of assets or liquidation as described in the
preceding sentence, it shall take whatever action it legally can in order to
cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder. No rights or obligations of the
Executive under this Agreement may be assigned or transferred by the Executive
other than his rights to compensation and benefits.
19. Representation.
The Company represents and warrants that this Agreement was
authorized by its Board of Directors on April 17, 1997, it is fully empowered to
enter into this Agreement and that the performance of its obligations under this
Agreement will not violate any agreement between it and any other person, firm
or organization.
20. Entire Agreement.
This Agreement contains the entire understanding and agreement
between the parties concerning the subject matter hereof and supersedes all
prior agreements, including the Agreement dated September 1, 1994 which is
amended and restated hereby, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Parties with respect thereto.
21. Amendment or Waiver.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by the Executive and an authorized
officer of the Company. No waiver by either Party of any breach by the other
Party of any condition or provision contained in this Agreement to be performed
by such other Party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent time. Any waiver
must be in writing and signed by the Executive or an authorized officer of the
Company, as the case may be.
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22. Severability.
In the event that any provision or portion of any provision of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions and portions remaining of
any provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect to the fullest extent permitted by law.
23. Survivorship.
The respective rights and obligations of the Parties hereunder
shall survive any termination of the Executive's employment to the extent
necessary to the intended preservation of such rights and obligations.
24. Beneficiaries/References.
The Executive shall be entitled to select (and change, to the
extent permitted under any applicable law) a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following the Executive's
death by giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative.
25. Governing Law/Jurisdiction.
This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New Jersey without
reference to principles of conflict of laws.
26. Resolution of Disputes.
Any disputes arising under or in connection with this Agreement
shall be resolved by binding arbitration before a single arbitrator, to be held
in New Jersey in accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator(s)
shall be final and subject to appeal only to the extent permitted by law. Each
party shall bear its or his own expenses incurred in connection with any
arbitration; provided, however, the cost of the arbitration, including without
limitation attorneys' fees of the Executive, shall be borne by the Company in
the event Executive is the prevailing party in the arbitration. Anything to the
contrary notwithstanding, each party hereto has the right to proceed with a
court action for injunctive relief or relief from violations of law not within
the jurisdiction of an arbitrator(s).
27. Notices.
Any notice given to a Party shall be in writing and shall be
deemed to have been given when delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested or by Federal Express
or other similar service, duly addressed to
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the Party concerned at the address indicated below or to such changed address as
such Party may subsequently give such notice of:
If to the Company:
Concord Camera Corp.
00 Xxxxxx Xxx
Xxxxxx, Xxx Xxxxxx 00000
Attention:
If to the Executive:
Xx. Xxx X. Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
28. Headings.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
29. Guarantors of Agreement.
It is acknowledged and agreed to by the Parties that Concord
Camera GmbH, Concord Camera Illinois Corp., Concord Camera UK, Concord Camera HK
Limited, Concord Keystone Sales Corp. and any subsequent Subsidiaries and/or
Affiliates of the Company or the above named companies shall be guarantors of
all payments due the Executive under this Agreement. Any subsequent subsidiaries
and/or affiliates shall upon request of the Executive execute a guaranty in form
and substance acceptable to the Executive and the Company.
30. Execution of Agreement and Further Actions.
This Agreement may be executed in duplicate copies each of which
shall constitute an original Agreement. The Parties agree to execute such other
documents and to take such action as may be necessary to carry out the intent of
this Agreement, including but not limited to the stock option agreement referred
to herein.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
CONCORD CAMERA CORP.
By: /s/ Xxxxxx Press
-------------------------
Xxxxxx Press,
Corporate Controller
/s/ Xxx X. Xxxxxxx
----------------------------
Xxx X. Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Each of the undersigned hereby, jointly
and severally, confirms the guaranty
provided for in Section 29 of the foregoing
Agreement:
CONCORD CAMERA GmbH
By:
---------------------
CONCORD CAMERA ILLINOIS CORP.
By:
---------------------
CONCORD CAMERA UK
By:
---------------------
CONCORD CAMERA HK LIMITED
By:
---------------------
CONCORD CAMERA (PANAMA) CORP.
By:
---------------------
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CONCORD CAMERA FRANCE
By:
---------------------
CONCORD KEYSTONE SALES CORP.
By:
---------------------
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